Hans
B.
Christensen

Associate Professor of Accounting

Hans Christensen studies international accounting harmonization, mandatory IFRS adoption, and disclosure behavior. He was a researcher on the Institute of Chartered Accountants in England and at Wales's EU Studies in Financial Reporting. He was also an auditor with the firm PricewaterhouseCoopers for four years where he audited financial statements prepared according to US-GAAP, IFRS, and varies national European accounting standards.

"During my work as an auditor, I observed how firms choose to account for similar events in very different ways, particularly when comparing them across countries," he said. "My research now focuses on why firms make these different choices and what the consequences are."

Christensen received a PhD Scholarship from the Institute of State Authorized Public Accountants in Denmark and the 2009 International Accounting Dissertation Award from the American Accounting Association International Accounting Section for his PhD dissertation. He has presented research at Harvard University, the University of North Carolina, the University of Aarhus in Denmark, Columbia University, Tilburg University in the Netherlands, and conferences organized by the American and European Accounting Associations.

Christensen earned a bachelor's degree with honors in business economics from the Anglia Business School in the United Kingdom in 2000. During his studies, he spent a semester at Marshall University in West Virginia. In 2003, he graduated with a master's degree from Aarhus School of Business at the University of Aarhus in Denmark. In 2008, he earned a PhD in accounting from Manchester Business School in the United Kingdom. Christensen joined the Chicago Booth faculty in 2008 and hopes that his students take away a basic understanding of accounting that allows them to read and understand financial reports.

Outside of academia, Christensen is preparing for the Chicago Marathon and enjoys traveling.

Research Activities

REVISION: The Effects of Price Transparency Regulation on Prices in the Healthcare Industry
Date Posted:
Oct 10,
2014
We provide empirical evidence on the causal effects of price transparency regulation (PTR) in the healthcare industry. Using micro data on actual healthcare purchases, and exploiting both between- and within-state variation to address endogeneity concerns, we find that PTR reduces the price charged for common, elective medical procedures by approximately 5% and increases the sensitivity of demand to a 1% change in charge prices by 0.5%. However, the effect of PTR on the actual prices paid by insured patients is limited to the relatively small fraction of patients that have the greatest incentives to directly consider the costs of care.

REVISION: Do IFRS Reconciliations Convey Information? The Effect of Debt Contracting
Date Posted:
Aug 12,
2014
We examine whether UK GAAP to IFRS earnings reconciliations convey information. As a result of debt contracting, mandatory accounting changes are expected to affect the likelihood of violating existing covenants based on rolling GAAP, leading to a redistribution of wealth between shareholders and lenders. Consistent with this prediction, we find significant market reactions to IFRS reconciliation announcements. These market reactions are more pronounced among firms that face a greater likelihood and costs of covenant violation and early announcements. While the association between later announcements and weaker market reactions is consistent with contractual implications of technical changes to earnings, which investors quickly learn to predict, it is inconsistent with IFRS forcing all firms in the sample to reveal firm-specific information through accruals. Thus, by showing that mandatory IFRS also affects debt contracting, we expand on existing IFRS research that focuses on how ...

REVISION: Debt Contracts and the Need for Mandatory Accounting Changes
Date Posted:
Aug 09,
2014
We describe a mechanism through which accounting standard setters can facilitate the contracting process and improve economic resource allocation. Contracts cannot anticipate all future contingencies and, therefore, cannot specify optimal accounting treatments or necessary adjustments to GAAP in many eventualities. This contractual incompleteness opens the scope for opportunistic behavior in unanticipated states, which, being rationally anticipated at contract initiation, distorts the allocation of economic resources. Standard setters can alleviate the friction by acting as arbiters that complete GAAP ex post. We empirically test whether mandatory GAAP changes play an efficiency role by examining the revealed preferences for including vs. excluding mandatory GAAP changes in debt contracts. We find evidence consistent with standard setters playing such a role, but less so over time. Overall, the evidence suggests that there is an economic rationale for standard setting in debt ...

REVISION: Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement
Date Posted:
Feb 12,
2014
This paper examines the economic effects of changes in securities regulation. We analyze two key directives in the European Union (EU) that tightened market abuse and transparency regulation. All EU member states were required to adopt these two directives, but did so at different points in time. Our research design exploits this staggered introduction of the same regulation to identify capital-market effects. We also examine cross-sectional variation in the strictness of implementation and enforcement as well as in prior regulatory conditions. We find that, on average, market liquidity increases as EU countries tighten market abuse and transparency regulation. The effects are larger in countries that implement and enforce the directives more strictly. They are also stronger in countries with traditionally stricter securities regulation and with a better prior track record of implementing regulation and government policies. The results indicate that the same forces that limited the ...

New: Mandatory IFRS Reporting and Changes in Enforcement
Date Posted:
Dec 07,
2013
In recent years, reporting under International Financial Reporting Standards (IFRS) became mandatory in many countries. The capital-market effects around this change have been extensively studied, but their sources are not yet well understood. This study aims to distinguish between several potential explanations for the observed capital-market effects. We find that, across all countries, mandatory IFRS reporting had little impact on liquidity. The liquidity effects around IFRS introduction are concentrated in the European Union (EU) and limited to five EU countries that concurrently made substantive changes in reporting enforcement. There is little evidence of liquidity benefits in IFRS countries without substantive enforcement changes even when they have strong legal and regulatory systems. Moreover, we find similar liquidity effects for firms that experience enforcement changes but do not concurrently switch to IFRS. Thus, changes in reporting enforcement or (unobserved) factors ...

REVISION: Mandatory IFRS Reporting and Changes in Enforcement
Date Posted:
Nov 04,
2013
In recent years, reporting under International Financial Reporting Standards (IFRS) became mandatory in many countries. The capital-market effects around this change have been extensively studied, but their sources are not yet well understood. This study aims to distinguish between several potential explanations for the observed capital-market effects. We find that, across all countries, mandatory IFRS reporting had little impact on liquidity. The liquidity effects around IFRS introduction are concentrated in the European Union (EU) and limited to five EU countries that concurrently made substantive changes in reporting enforcement. There is little evidence of liquidity benefits in IFRS countries without substantive enforcement changes even when they have strong legal and regulatory systems. Moreover, we find similar liquidity effects for firms that experience enforcement changes but do not concurrently switch to IFRS. Thus, changes in reporting enforcement or (unobserved) factors ...

REVISION: Proper Inferences or a Market for Excuses? The Capital-Market Effects of Mandatory IFRS Adoption
Date Posted:
Oct 12,
2013
Barth and Israeli (2013) raise five serious concerns regarding the research design and interpretation of Christensen, Hail, and Leuz (2013). They claim: (i) the evidence stands in stark contrast to Daske, Hail, Leuz, and Verdi (2008) and fails to replicate its prior findings; (ii) the research design using fixed effects leaves out main effects and two-way interactions which likely biases the estimated liquidity effects around IFRS adoption and changes in enforcement; (iii) the vast majority of sample observations do not contribute to the identification which is misleading in terms of the scope and the conclusions that can be drawn from the study; (iv) the timing of IFRS adoption and enforcement changes is measured imprecisely leading to low power tests; and (v) the evidence from Japan is irrelevant to the study. In this note, we show that all five claims are incorrect or misleading. Our discussion also more broadly describes how to properly interpret the fixed-effect specifications ...

REVISION: Does Fair Value Accounting for Non-Financial Assets Pass the Market Test?
Date Posted:
Jun 07,
2013
The choice between fair value and historical cost accounting is the subject of long-standing controversy among accounting academics and regulators. Nevertheless, the market-based evidence on this subject is very limited. We study the choice of fair value versus historical cost accounting for non-financial assets in setting where market forces rather than regulators determine the outcome. In general, we find a very limited use of fair value accounting. However, the observed variation is consist

REVISION: Does Fair Value Accounting for Non-Financial Assets Pass the Market Test?
Date Posted:
Feb 27,
2013
The choice between fair value and historical cost accounting is the subject of long-standing controversy among accounting academics and regulators. Nevertheless, the market-based evidence on this subject is very limited. We study the choice of fair value versus historical cost accounting for non-financial assets in a setting where market forces rather than regulators determine the outcome. In general, we find a very limited use of fair value accounting. However, the observed variation is consist

REVISION: Why Do Firms Rarely Adopt IFRS Voluntarily? Academics Find Significant Benefits and the Costs Appear
Date Posted:
May 28,
2012
Kim and Shi (this issue) document that voluntary IFRS adoption is associated with significant benefits and argue that the effect is causal – a conclusion that is similar to many published papers on IFRS adoption. Yet voluntary IFRS adopters constitute only a small percentage of the global population of firms, which implies that either practitioners behave irrationally or the benefits are incorrectly estimated by academics. In this discussion I argue that the error is on the part of academics, no

REVISION: Capital Versus Performance Covenants in Debt Contracts
Date Posted:
Sep 26,
2011
Building on contracting theory, we argue that financial covenants control the conflicts of interest between lenders and borrowers via two different mechanisms. Capital covenants control agency problems by aligning debtholder-shareholder interests. Performance covenants serve as tripwires that limit agency problems via the transfer of control to lenders in states where the value of their claim is at risk. Companies trade off these mechanisms. Capital covenants impose costly restrictions on capit

REVISION: Incentives or Standards: What Determines Accounting Quality Changes Around IFRS Adoption?
Date Posted:
Mar 14,
2008
We examine the impact of incentives on accounting quality changes around IFRS adoption. In particular, we examine earnings management and timely loss recognition, constructs often used to assess accounting standards quality. While existing literature documents accounting quality improvements following IFRS adoption, we find that improvements are confined to firms with incentives to adopt. Further, we find that firms that resist IFRS have closer connections with banks and inside shareholders, whi